Presentation for Human Resource Managers Benefits Spouse ... · Presentation for Human Resource ... Eligibility Audit August 30, 2018 . 2 What is a Dependent Eligibility Audit? •The

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Presentation for Human Resource Managers

Benefits Spouse and Dependent

Eligibility Audit

August 30, 2018

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What is a Dependent Eligibility Audit?

• The Dependent Eligibility Audit is a

formal process in which a third party

vendor manages the process of

contacting State employees and

collecting documents which verify that

those spouses and dependents

enrolled in our benefits plans meet the

eligibility requirements.

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Why Do a Dependent Eligibility Audit ?

• The State has not required new hires or employees who get married, adopt a child, or add a new baby to provide documents which prove that their dependents meet the eligibility requirements.

• There is potential for ineligible dependents being enrolled in our plans and claims paid for individuals who are not eligible .

• The State Employee Health Plan is self-insured, which means the State pays directly for medical and prescription drug claims. It is our responsibility to manage the Plan in a financially prudent manner and that includes taking reasonable actions to prevent misallocation of funds.

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Why Do a Dependent Eligibility Audit

• There are about 13,000 dependents enrolled in the health plan as of 7/01/18.

• In FY18 the State paid $120.9 million in medical and Rx claims.

• The average cost per member per year for FY18 was approx. $4,644.

• If we identify 3% (390) of currently enrolled members as being ineligible, then the claims cost paid by State would decrease by $4,644 X 390= $1,811,160 in FY 19 as the ineligible will be removed from the plan.

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• Healthcare costs are increasing at a

high rate and we need to deploy

effective and reasonable measures to

manage costs.

• A majority (74%) of large employers

have conducted a dependent

eligibility audit and perform ongoing

dependent eligibility verification.

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• Data from our benefits consultant shows that on

average large benefit plans find 5%-7% of enrolled

dependents are ineligible after completing a

dependent eligibility audit.

• Removing costs incurred by ineligible dependents

reduces overall plan expenses, minimizes employee

contributions, and saves the Plan money within

months.

• Ongoing eligibility verification ensures that the

issue does not reemerge (50% of dropped

dependents attempt to enroll again at next open

enrollment).

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Why Ineligible Dependents are Enrolled

• Employees don’t know or they

misunderstand the eligibility rules

• Simple oversights by the plan

administrator

• Intentional attempt to gain benefits for

someone who should not be covered

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Overview of the Dependent Eligibility Audit

• BHR/Benefits selected Dialog Direct as our vendor partner through a competitive RFP process.

• Dialog Direct is based in Highland Park, Michigan and has been performing dependent eligibility audits for fifteen years. They have contracted for these services with 45 Fortune 500 employers, among other clients.

• Dialog Direct will perform all of the audit work and will be communicating directly with State employees in advance of the audit and throughout the process.

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Dependent Eligibility Audit- Employee Communications

– Four separate documents sent by Dialog Direct

1. Verification/Introduction Letter Introduces the process, provides a rationale for the program, and tells the employee what steps will be required by what dates, and the Eligibility Worksheet which provides instructions and lists acceptable forms of documentation.

2. Status Letter Designed to provide employees with information regarding the outcome of their verification. If all of the information needed was received and correct this letter is sent to the employee to let them know that they have completed all of the requirements of the verification; and no additional information will be required from them.

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Employee Communications

2. Status Letter (continued)

If all of the documents supplied are not correct or are

missing; this letter is sent out to the employee letting them

know, by dependent, the result of the verification, what

information is still needed, and when the information is needed.

3. Non-responder Postcard

Sent to those employees who have not yet sent in any

documents to complete the verification. This is sent once

during the course of the verification at the halfway point.

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Dependent Eligibility Audit-Employee Communications

4. Final disposition letter

Sent to all employees at the conclusion of the

initial audit .

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Dependent Eligibility Audit-Member Support

– Toll Free Number

Dialog Direct provides a dedicated toll free number for members to call for inquiry and follow up. Dialog Direct Customer Service Representatives (CSRs) will be available during the hours of 9 a.m. and 6 p.m. CST Monday through Friday.

– Web Portal

Dialog Direct also offers employees an online portal thatwill be available throughout the entire process. The Web site allows employees to review the real time status of their dependents, voluntarily drop ineligible dependents and upload documents electronically. The Web site also provides information for the employee to assist them in completing the requirements of the verification.

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Examples of Documents Dialog Direct Will Accept

• IMPORTANT!- Send only copies, not original

documents!

– Copy of “short form” birth certificate

– Copy of marriage license and proof of joint ownership (e.g.mortgage)

– Copy of legal adoption document

– Copy of current year U.S. Income Tax filing (redact all financial info and first five digits of SSNs)

– Current Rent/lease agreement

• Eligibility Worksheet includes a comprehensive list of

acceptable documents

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Appeals process? • Some employees may disagree with Dialog Direct’s determination that a previously enrolled dependent is ineligible.

• If that occurs the member may submit a letter and supporting documents to

request an appeal.

• If the appeal is approved then we will not remove the dependent from benefits eligibility. Otherwise if the appeal is denied we will remove the ineligible dependent.

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Exceptions ? • We realize this is a new process for

employees and have dedicated much

effort to creating clear and concise

communications and detailed instructions

along with the deadline for members to

submit their documents.

• We expect members to read and follow the

instructions and as needed to contact

Dialog Direct for assistance and act in a

timely manner, not after the deadline.

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Exceptions ?

• There are limited circumstances in

which we will allow exceptions to the

dependent eligibility process.

1. Members who are on active duty in the

military during the eligibility audit period

are exempted from meeting the

deadline, but will need to verify their

dependents within 60 days of return to

active employment with the State.

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Exceptions ?

2.Members who are on a sabbatical , living

outside the United States during the

eligibility audit period are exempted from

meeting the deadline, but will need to

submit their dependent verification

documents within 60 days of return to active

employment in South Dakota.

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What Happens to Ineligible Dependents?

• After the completion of the audit Dialog Direct will send Benefits a file with all dependents: – those for whom they received and validated

eligibility documents

– those for whom there was no response or who did not submit acceptable documentary proof of eligibility

• Benefits will remove ineligible dependents from our system and benefits coverage will cease as of December 31, 2018

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What Happens after the Audit Ends?

• Dialog Direct will continue to provide

benefits eligibility verification services for the

State after the completion of the audit.

• They will manage the dependent

verification process by collecting

appropriate documentation for all new

hires, family status changes (marriage, birth,

adoption) as this will be a continuing

business process to ensure that we maintain

accurate dependent eligibility data.

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Key Dates And Deadlines

Mail Verification

Packages 9/5/18

Verification Phase (60 Days)

9/10/18 11/9/18

Non-Responder mailing 10/9/18 10/9/18

Final Disposition Letter Final Disposition file Final Disposition Drop Date

11/16/18 11/16/18 12/31/18

Appeal Phase (60 days) 11/19/18 1/18/19

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